What's holding us back?
Despite its vast potential, New Zealand’s geothermal sector faces several barriers. Exploration has stagnated since the Crown’s initial drilling efforts, with high upfront costs and fragmented access to geothermal data.
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High costs and early-stage risk
Costly drilling is required to confirm and characterise the potential of a geothermal resource in the early stages of a project. While geothermal developments pay off in the long run, the subsurface uncertainty and risk of discovering a ‘dry well’ can discourage investors from partnering in the early phases, decreasing the chances of development happening. Despite being well-positioned geographically, Māori landowners often face additional hurdles in accessing affordable capital and technical expertise.
Limited access to geothermal data
Much of our knowledge about New Zealand’s geothermal systems is not consolidated, making it difficult for new market entrants, smaller players and tāngata whenua to assess project viability and invest with confidence. We also lack the level of data and insights necessary to progress development of geothermal systems that may be well-suited to energy production – both electricity production and direct use.
Slow uptake of geoheat applications
The sector faces challenges in scaling low- and medium-heat applications, which are underutilised despite their potential to decarbonise industries, transition gas users (including in public facilities like hospitals, prisons and schools) and support regional growth. Awareness of lower enthalpy geothermal technologies, such as heating and horticultural applications, is also low, potentially contributing to the limited uptake to date, particularly in regions outside of New Zealand’s prominent high-heat geothermal zones.
Regulatory frameworks and wider system settings
Regulatory settings, designed for conventional geothermal use and protection of geothermal surface features, have not kept pace with low-temperature applications and remain undeveloped for emerging next-generation technologies, including supercritical/superhot geothermal.
There is value in ensuring that protected geothermal systems and their globally significant surface features remain protected. Recognising their unique value and contribution to wellbeing, tourism and regional economies is central to this strategy. However, ambiguity in some system classification categories, in particular ‘research’ systems, has precluded potential development of certain geothermal fields.